A study on awareness of investment opportunities in mutual ...

Vol-1 Issue-3 2016 IJARIIE-ISSN(O)-2395-4396

International Conference on "Research avenues in Social Science” Organize by SNGC, Coimbatore

C-1228 www.ijariie.com 255

A study on awareness of investment opportunities in mutual funds - special

Significance on SIP

BYJU.K

Ph.D Research Scholar, Department of Commerce

SREE NARAYANA GURU COLLEGE Coimbatore - Palakkad National Highway (NH 47), K.G Chavadi Post

Executive Summery

The study is confined to the factors considered by investors by selecting mutual funds for their various investments. The level of awareness about SIP, Source o f information, factors influencing decision making are studied. The above

said factors are compared with demographic factors such as age, marital status, Occupation and gross annual income of the respondents to analyze “the awareness of investment opportunities in mutual funds - special Sign ificance on

SIP”

Introduction

These days you are hearing more and more about mutual funds as a means of investment. If you are like most people, you probably have most of your money in a bank savings account and your biggest investment may be your home.

Apart from that, investing is probably something you simply do not have the time or knowledge to get involved in. You are not the only one. This is why investing through mutual funds has become such a popular way of investing.

Mutual Fund

A mutual fund is a pool of money from numerous investors who wish to save or make money just like you. Investing in a mutual fund can be a lot easier than buying and selling individual stocks and bonds on your own. Investors can sell their shares when they want.

Professional Management. Each fund's investments are chosen and monitored by qualified professionals who use this money to create a portfolio. That portfolio could consist of stocks, bonds, money market instruments or a

combination of those.

Fund Ownership. As an investor, you own shares of the mutual fund, not the individual securities. Mutual funds permit you to invest small amounts of money, however much you would like, but even so, you can benefit from being

involved in a large pool of cash invested by other people. All shareholders share in the fund' s gains and losses on an

equal basis, proportionately to the amount they've invested.




History of the Indian Mut ual Fund Industry

The mutual fund industry in India started in 1963 with the format ion of Unit Trust of India, at the init iative of the

Government of India and Reserve Bank. The history of mutual funds in India can be b roadly divided into four distinct

phases

• First Phase – 1964-87

• Second Phase – 1987-199 3 (Entry of Public Sector Funds)

• Third Phase – 1993-2003 (Entry of Private Sector Funds) • Fourth Phase – since February 2003 (Global Scenario)

Types of Mutual Fund

Mutual Funds

By Maturi ty

By

Investment

Period

Objective

Close

Open

In dex Income

Gilt Balance Equity Money

ended

ended

fund

fund

fund

market

Schemes according to Maturity Period

A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity

period.

• Open-ended Fund

An open-ended Mutual fund is one that is available for subscription and repurchase on a continuous basis . These

Funds d o not have a fixed maturity period




• Close-ended Fund

A close-ended Mutual fund has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme

Fund according to Investment Objective

A scheme can also be classified as growth fund, income fund, or balanced fund considering its investment objective.

• Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to long - term.

Such funds have comparatively high risks. These schemes provide different options to the investors like dividend

option, capital appreciation, etc.

• Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to inves tors.

Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities

and money market instruments such funds are less risky compared to equity schemes

• Balanced Fund

The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents.

These are appropriate for investors looking for moderate growth

• Money Market

These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate

income. These schemes invest exclusively in safer short-term instruments such as treasury bills, commercial paper

and government securities, etc. These funds are appropriate for corporate and individual investors as a means to park

their surplus funds for short periods

• Gilt Funds

These funds invest exclusively in government securities. Government securities have no default risk.




• Index Funds

This scheme invests in the securities in the same weightage comprising of an index. This scheme would rise or fall in accordance with the rise or fall in the index

Systematic Investment Plan

A Systematic Investment Plan or SIP is a smart and hassle free mode for investing money in mutual funds. SIP

allows you to invest a certain pre-determined amount at a regular interval (weekly, monthly, quarterly, etc.). A

SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth

for the future.

How does it work?

A SIP is a flexible and easy investment plan. Your money is

auto-debited from your bank account and invested into a specific

mutual fund scheme. You are allocated certain number of units

based on the ongoing market rate (called NAV or net asset value)

for the day.

Every time you invest money, additional units of the scheme are

purchased at the market rate and added to your account. Hence,

units are bought at different rates and investors benefit from Rupee-Cost Averaging and the Power of Compounding.

Rupee-Cost averaging

With volatile markets, most investors remain skeptical about the best time to invest and try to 'time' their entry

into the market. Rupee-cost averaging allows you to opt out of the guessing game. Since you are a regular

investor, your money fetches more units when the price is low and lesser when the price is high. During

volatile period, it may allow you to achieve a lower average cost per unit.

Power of Compounding

Albert Einstein once said, "Compound interest is the eighth wonder of the world. He, who understands it,

earns it... he who doesn't... pays it." The rule for compounding is simple - the sooner you start investing, the

more time your money has to grow.




Scope of the study

The study is confined to the factors considered by investors by selecting mutual funds for their various investments. The

level of awareness about SIP, Source of information, factors influencing decision making are studied. The above said

factors are compared with demographic factors such as age, marital status, Occupation and gross annual income of the

respondents to analyze “the awareness of investment opportunities in mutual funds - special Significance on SIP”

Objectives of the study

• To study the attitude of the investors towards mutual funds

• To analyze the various sources that influences the respondents in selecting mutual funds and SIP.

• To measure the level of awareness of the respondents about mutual funds and SIP.

• To analyze the factors influencing investors awareness.

• To offer suggestion for the improvement on investment in mutual funds.

Methodology and Tools used

The study is main ly based on the primary data and the required primary data were collected through the structured

questionnaires from the 200 sample respondents who were selected through the convenience random sampling method. In

order to find out the association between the various independent variables and the dependent variables analyzed by using

statistical tools like Simple percentages, Chi - square test and ANOVA.

Findings

• 30% (Majority) of respondents belongs to the age group of 25 to 34 and 21% belongs to 18 to 24 (Ref: Table.1).

• The gender wise distribution of sample unit reveals that the number of male respondents exceeds female sample

respondents. (Ref: Table.2)

• On marital status wise distribution 62% of sample respondents are married.(Ref: Table.3)

The distribution of sample unit by education explains that majority of the respondents 32% Post Graduate qualification.

(Ref: Table.4)

• The occupation of sample unit is largely distributed between employment (28%) and Business (20%). (Ref:

Table.5)

• The study indicated that 44% of the respondents have the income between 25001 to 50000. (Ref: Table.6)

• The study indicates that 36% of the respondents get information through friends.(Ref: Table

• .7)

• It is observed that 69% of the respondents know SIP and its relevance. (Ref: Table.8)

• It is observed from the study majority of the respondents (38%) take investment decision their own. Only 5%

influence through dealers. (Ref: Tab le.9) The result of the chi-square test indicates that the attributes such as Age

group and Awareness of SIP, Occupation and Awareness of SIP, Education and Awareness of SIP, Marital status

and Factors influencing decision making – the hypothesis is rejected and we can conclude that this attributes are

dependent so directly affect awareness and decision making. But while testing the attributes Gender and

Awareness of SIP and Gender and Factors influencing decision making – the hypothesis is accepted. That is these

attributes are independent.(Ref: Table.10)




• The ANOVA Table of analysis of variance between education level and source of information while carrying out

two way analysis exhibits that through educational level there is significant variance since calculated value (3.02)

greater than Table value (3.01). But through raw wise analysis that is source of information the hypothesis is

accepted so there is no significant variance here the calculated value (2.49) and Table value (3.01). (Ref: Table.11)

• The ANOVA Table of variance between occupation and source of information reveals that through column wise

analysis there is significant deference in occupation and source of in formation of the respondents. Calculated

value (5.22) Tab le Value (3.01). And on raw wise analysis that is through source of information results there is no

significant variance. Since Calculated value (2.369) and Table value (3.01) (Ref: Tbale.12)

• The ANOVA table of analysis of variance between annual income and factors influencing decision making reveals

that through column wise analysis there is significant variance in annual income of respondent’s calculated value

(5.27) table value (3.86). and on raw wise analysis that is factors influencing decision making also have significant

variance the calculated value is (4.60) and Table value (3.86) (Ref: Table.13)

Suggestions

• More awareness about SIP can be made to the general public through advertisements promotional programmes

etc.

• Proper guidelines must be provided to Business, agricultural people for improving their awareness regarding

investments.

• Dealers can create more awareness regarding SIP to increase investor’s attitude towards SIP.

• Dealers can have a friendly approach with investors to promote investor’s decision making power on mutual

funds.

• More awareness programme to be given to low income groups (up to 10000) to promote investment in mutual

fund through SIP.

• More awareness programme to be given to lower education level people (That is Higher Secondary, SSLC and

Below SSLC)

• Investor education is very important factor for investors. Research and awareness programmers’ should be

conducted for investors. Seminars, conferences and training programs should be arranged for th is purpose.

Adequate publicity through newspapers, magazines, T.V., radio, pamphlets and brochures should be done.

Conclusion

The Mutual Fund Industry is a growth industry it cover a spectrum of Investment Options. Start Investing Early &

Systematically. We invest through a Professional Money Manager. The study was based on the awareness of investment

opportunities in mutual funds – with special significant on SIP. It becomes essential that the mutual fund industry should

stream line itself and become more compatible with global scenario in the fields of operation and services.

Appendix

Table 1. Distribution of sample units by Age




Age No. of respondents Percentage

18 - 24 42 21

25 - 34 60 30

35 – 44 52 26

45 and Above 46 23

Total 200 100

Table 2. Distribution of sample unit by Gender

Gender No. of respondents Percentage

Male 112 56

Fema le 88 44

Total 200 100

Table 3. Distribution of sample by marital status.

Status No. of respondents Percentage

Married 124 62

Unma r rie d 76 38

Total 200 100

Table 4. Distribution sample by Educational qualification.

Level of Education No. of respondents Percentage

Below SSLC 8 4

SSLC / Highe r Secon d ar y 44 22

Graduate 52 26

Post Grad ua te 64 32

Othe rs 32 16

Total 200 100

Table 5. Distribution of sample by Occupation.

Occupation No. of respondents Percentage

Business 40 20

Employ m e nt 56 28

Profession 38 19

Agric ul tu re 15 7.5

Othe rs 51 25.5

Total 200 100




Table 6.Distribution of sample Units by Income

Income No. of respondents Percentage

Upto 10000 22 11

10001 – 25000 46 23

25001 – 50000 88 44

50001 and Above 44 22

Total 200 100

Table7. Distribution of sample unit by source of information.

Source No. of respondents Percentage

Friends 72 36

Relatives 32 16

Advisement 56 28

News paper 26 13

Others 14 7

Total 200 100

Table 8. Distribution of sample unit by knowing SIP and its relevance

No. of respondents Percentage

Know 138 69

Not Know 62 31

Total 200 100

Table 9. Distribution of sample units by Factors influencing decision making.

Factors No. of respondents Percentage

Self 76 38

Family 68 34

Friends 46 23

Dealers 10 5

Total 200 100

Table 10. Analysis of Chi-Square – Testing independency of two attributes.

Attributes Chi – Table value Df Remarks Hypothesis

square (Dependency or

values independency)

Age group and awareness 13.8 7.82 3 Dependent Rejected

of SIP

Occupation and 28.14 9.488 4 Dependent Rejected




awar en e ss of SIP

Education and awareness 17.932 9.488 4 Dependent Rejected

of SIP

Gender and Awareness 3.74 3.84 1 Independent Accepted

of SIP

Marital status and factors 10.62 7.82 3 Dependent Rejected

influencing decision

making

Gender and factors 6.47 7.82 3 Independent Accepted

influencing decision

making

Table 11. Analysis of variance between educational level and source of information.

Source of SUM of Degree of Mean F Ratio Table Remarks Hypothesis

Variation squares freedom Squares value

SSC 443.2 4 110.8 3.02 3.01 Significant Rejected

Variance

SSR 364.8 4 91.2 2.49 3.01 No Accepted

Significant

Variance

Residual 586 16 36.62

error

Total 1394 24

Table 12. Analysis of variance between Occupation and Source of information.



SSC 443.2 4 110.8 5.22 3.01 Significant Rejected

Variance

SSR 201.2 4 50.3 2.369 3.01 No Accepted

Significant

Variance

Residual 339.6 16 21.225

error

Total 984 24

Table 13. Analysis of variance between annual income and factors influencing decision making.



SSC 654 3 218 5.27 3.86 Significant Rejected

Variance




SSR 570 3 190 4.60 3.86 Significant Rejected

Variance

Residual 372 9 41.3

error

Total 1596 15

Reference;

Kothari C R, Research Methodology.

S.P. Guptha, Statistical Methods.

M.Y. Khan, Indian Financial System.

Prasanna Chandra, Investment Analysis and Portfolio Management

moneycontrol.com

wikipedia.co.in

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